Sellers in UK having to discount prices by 4.5% to sell

UK house sellers have had to discount prices by an average of 4.5% to shift homes this month, the highest level for five years, according to figures released by Zoopla today.   

This increase in discounting has come as the annual house price rise figure has dropped from 8.6% in February last year to 5.3% this month, the property portal said. 

With buyer demand and sales volumes down between 20% to 50% compared to 12 months ago, sellers in the UK have had to discount homes by an average of £14,100. 

Zoopla said the high level of discounting, effectively forcing sellers to give up a third of the price gains registered uring the post-pandemic boom, reflected the ”rapid transition from a hot sellers’ market […] to a buyers’ market with more negotiation on price.”

Zoopla predicted that annual house price inflation will fall by this summer, however, the firm said house prices will have a ‘soft landing’ with small falls of 5% and 1m sales this year. 

Demand and sales, while down, are slightly ahead of the pre-pandemic years of 2017 and 2019, and house prices in the UK did grow an average of £42,000 in value during the covid period, the portal service noted.

Richard Donnell, executive director at Zoopla, said: “Greater realism on the part of sellers is supporting housing market activity in the face of higher borrowing costs. 

“Many homeowners are sitting on sizable house price gains made over recent years and have more room to be flexible accepting offers below the asking price.”

He added: “We believe the market remains on track for a soft landing in 2023 with modest price falls of up to 5% and one million housing sales.”

Small month-on-month price reductions are expected over the next two to four months as a “soft reset in house prices continues”, Zoopla predicted. 

Zoopla’s findings echo those of other recent indices. Membership body RICS recorded the ninth successive month of surveyors recording falling demand in January this year. Nationwide figures showed the average UK house price fell by 0.6% in January, which took them to 3.2% below last August’s peak.   

Rightmove recorded a ‘price bounce’ in January but also noted they were below October 2022’s record. 

Discounts to asking prices are higher than in the pre-pandemic years, Zoopla said today, which means it is becoming a buyers’ market because of the reduction in buying power because of the higher mortgage rates. 

Mortgage rates hit a 14-year high in October last year after the government’s disasterous mini-budget in September rocked the housing market.